He can be … [i]deological is his view that markets can solve virtually every problem. He writes, for example, that “in the long arc of history, no human creation has has a greater positive impact on more people more rapidly than free-enterprise capitalism.” Maybe so–although democracy has done a lot for people, too–but Mackey’s faith markets and distrust of government is so absolute that he seems willfully blind to the notion of market failure.

Gunther shifts back, briefly, into biography–college dropout, eastern philosophy, yoga, mediation, veganism–then returns to Mackey’s views on business. Turns out that Mackey thinks some businesses and even whole industries (big Phama, most of Wall Street) have gotten off track, so I wonder why the claim he is “willfully blind to the notion of market failure.”

After a few more details Gunther notes Mackey’s market-oriented optimism and winds up with:

Eventually, he may turn out to be right. But so far, markets have done an imperfect job at best of rewarding the better companies and punishing bad actors. Sure, Lehman Brothers, Bear Stearns and Countrywide all collapsed … [but] tobacco companies are doing fine. Factory farms — a favorite target of Mackey’s — are doing OK, too. Nor are markets solving the climate crisis, or protecting the human rights of factory workers in China or Bangladesh. Only governments can do that.

If it is true that “only governments can” protect human rights of factory workers, then at the least Gunther ought to be weighing the costs of government failure against the costs of market failure. And really, which is more serious, failure of competition in markets to weed out ‘bad actors’ rapidly or failure to protect human rights?

If we count that not all corrupt businesses fail quickly as some kind of failure of free enterprise, then ought we also count that not all corrupt governments fail rapidly as a failure of politics? Of course, corrupt markets and corrupt governments tend to go hand in hand.

And, by the way, “Nor are markets solving the climate crisis”? Tell me, Mr. Gunther, how well is democracy working on climate change policy?

8 thoughts on “Marc Gunther profiles Whole Foods CEO John Mackey”

One need only look at human rights in China, not only regarding workers in non-government factories, but also workers in government prison factories, as well as beyond the work environment.

China is also the world’s largest emitter of the carbon supposedly responsible for the purported “climate crisis”; and, its emissions are growing faster than in any other nation, at about 9% per year.

Gunther also ignores the US government involvement (causation?) in the financial crisis, beginning with the Community Reinvestment Act and aggravated by Fannie Mae, Freddie Mac and various community organizers.

Markets rely on the combined intelligence and experience of all of their participants, rather than on some subset of arguably well-intentioned bureaucrats. History tells us, if we are willing to learn, all we need to know about the relative performance of market vs. planned economies.

If a market fails to deliver a public good, or is that market delivers negative externalities, that is because of poor market design. Who designs markets? Usually governments, through their laws, regulations, and enforcement actions.

A market is a tool for distributing goods and costs to those who value them most or are most willing/able to bear them in exchange for goods. Some markets are better at this than others. The difference, at least where humans can affect it, lies in market design/regulation.

Hence Gunther is absolutely right to place the blame for market failures on market designers/regulators.

Tom, my complaint about Gunther is that he doesn’t seem to blame market failures on regulators, he blames market failures on markets. I grant that you can read his final remark “only governments can do that” as implicitly blaming governments for the failure to do what only they can do (and similarly as deflecting blame from markets, since obviously markets cannot be blamed for not doing something they cannot do, namely something “only governments can do”).

But I think it is wrong that “only governments can do that.” Consider, for example, Peter Leeson’s book on pirates, “The Invisible Hook.” Compare the treatment of low-level sailors on legal, government sanctioned privateering vessels to that on illegal, government-hunted pirate ships. A very selective example, but it is a sufficient counter to Gunther’s “only government” claim.

Next we could look into why governments so infrequently push to protect human rights, and what kind of conditions lead governments switch from mostly abusing the human rights of people to sometime or often protecting them. I’d argue that history shows that markets have played a role in promoting the switch, but you have to distinguish between “pro market” views and “pro business” views. Businesses as a whole frequently don’t do a lot for human rights, but competition and markets do undermine the ability of businesses (and over time governments) to abuse human rights.

I see your point… we’re certainly agreed that you can’t blame markets for anything.

I’m not sure that we can give markets credit for protecting human rights, though. I would say what undermines the ability of business and governments to abuse human rights is labor scarcity, which increases workers’ market power. I have not read The Invisible Hook, but I suspect that it supports my thesis: fewer sailors want to work on illegal vessels than legal ones, and so they end up being better treated. But the labor market is equally present on both pirate ships and legal ships. Isn’t it the government’s influence (by hunting pirates, and keeping labor scarce) that protects low-level sailors on pirate ships?

I’m tempted to misquote Star Wars…. giving in to temptation:

Markets have a light side and a dark side. They surround us, permeate us, and bind the economy together.

I’m also not sure that “not doing what I prefer” should be called “market failure”.

Then again, my roots are Austrian enough that I can’t see that the term really means anything else – by which I mean that the term looks meaningless other than as a demand for the market to be ignored and a favoured outcome substituted.

Which wouldn’t bother me so much if they’d say it in those terms, honestly.